- GOP signals tax flexibility ahead of talks. Staunch Republican opposition to tax hikes appears to have softened slightly ahead of a meeting today between President Obama and senior legislators from both parties about raising the $14.3T debt ceiling by August 2. Rep. Eric Cantor said the GOP would consider scaling back tax breaks in return for tax cuts elsewhere, the first time the GOP has signaled an openness to proposals from Obama. Treasury officials are meanwhile exploring a contingency plan if the limit isn't raised, sources said, although won't admit this for fear it would slow down the momentum of negotiations.
- Goldman took $15B Fed loan during crisis. The Fed has released further details of the actions it took to maintain liquidity during the financial crisis, disclosing that a Goldman Sachs (NYSE:GS) unit borrowed $15B in December 2008 from a program called ST OMO. This was the largest single loan from the scheme, whose details were sealed until yesterday. Loans outstanding peaked at $80B, including $18B borrowed by Lehman Brothers before its collapse; all ST OMO loans have been repaid.
- BOE leaves rate unchanged. The Bank of England kept its benchmark interest rate at 0.5%, as predicted, as concerns about an economic slowdown held sway over inflation worries. The BOE also left its £200B ($320B) QE program in place. The bank's decision comes shortly before that of the ECB, which is widely expected to increase eurozone rates to 1.5% from 1.25% for its second hike in three months.
- Major banks near $20B foreclosure deal. Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM) and three other mortgage providers are reportedly in advanced negotiations with state and federal officials to resolve claims over improper foreclosure practices in a settlement that could exceed $20B. The deal, which would also include Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and Ally Financial, would set standards for servicing loans and processing foreclosures, and may serve as a template for claims against the rest of the industry.
- NYSE shareholders poised to OK merger. NYSE Euronext (NYSE:NYX) shareholders are expected to approve today a $10.2B merger of equals with Deutsche Boerse (OTCPK:DBOEY), with the German firm's shareholders scheduled to vote on the deal next week. Finalization could be held up by EU antitrust regulators, though, who may demand divestitures and other concessions.
- Sony and BMG interested in EMI. Sony (NYSE:SNE) and BMG are among those interested in EMI, which Citigroup (C) hopes to sell within a couple of months, sources said. Other potential bidders include Len Blavatnik, who is leading the $1.3B purchase of Warner Music Group (NYSE:WMG), and Vivendi's (OTC:VIVDY) Universal Music. Buying EMI offers a consolidation opportunity for music companies that have mostly struggled as listeners reduced CD purchases, although data released yesterday showed album sales rose 1% in H1, the first increase in seven years.
- Hacking scandal could derail News Corp.'s BSkyB deal. News Corp.'s (NASDAQ:NWS) attempts to buy the 60.9% of BSkyB (OTCQX:BSYBY) it doesn't own could be delayed or even blocked following allegations that the News of the World newspaper hacked into the phones of a high-profile teenage murder victim and relatives of terrorist victims. U.K. regulator Ofcom, which can withdraw a broadcasting license, has already signed off on the deal, but warned yesterday it must be satisfied the holder of a license is "fit and proper." News Corp.'s shares closed -3.2% on concerns about the deal.
- Apple security flaw exposed. Hackers yesterday disclosed a defect in Apple's (NASDAQ:AAPL) iOS operating system that could enable criminals to break into iPhones, iPads and iPod Touch devices. Apple said it was developing a fix for the problem. In other negative news, a judge denied Apple a preliminary injunction to stop Amazon (NASDAQ:AMZN) from using the 'App Store' name. Neither development is likely to significantly impact Apple's momentum, with new reports suggesting the next iPhone will arrive in the autumn. Apple hopes to ship 25M units by the end of the year.
- Greece's creditors more relaxed about default. While the ECB and much of the EU may be steadfast in their opposition to a Greek default, bankers seem to be more relaxed. "I don’t think that a temporary period of selective default...is necessarily the worst thing," Charles Dallara, the head of the International Institute of Finance, said yesterday. Dallara's comments come as the IIF, the world’s biggest group of international financial companies, meets banks, insurers and officials from Greece and the EU to discuss a rollover. Meanwhile, Germany has revived a proposal for a bond swap to lengthen Greek debt maturities, which the ECB staunchly opposes.
- Samsung forecasts profit slump. Samsung (OTC:SSNLF), the world's largest maker of memory chips and televisions, expects its Q2 2011 operating profit to plummet to 3.7T won ($3.5B) from a record 5.01T a year ago. The company's performance was hurt by weak earnings at its LCD unit due to falling demand for TVs and PCs. This overshadowed a recovery at Samsung's handset business, whose new Galaxy S smartphone has become a major competitor to the iPhone (AAPL).
- John Malone: Live Nation would benefit from going private. Struggling concert promoter Live Nation (NYSE:LYV) could turn around more effectively if it were to go private, John Malone has said. "Whether that's feasible is a function of how the large shareholders and management feel about it, and the financing of a deal," said Malone, who is chairman of Liberty Media (LCAPA), Live Nation's biggest shareholder. One obstacle to going private, though, may be Live Nation's huge debt, left over from its merger with Ticketmaster 19 months ago.
- Antitrust chief to quit. Christine Varney, the top antitrust official at the Justice Department, will step down later this year to join a prominent New York M&A law firm. The departure of Varney, who is seen as tough, pragmatic and politically savvy, comes as the department conducts several high-profile merger reviews, including AT&T's (NYSE:T) $39B purchase of T-Mobile USA from Deutsche Telekom (OTCQX:DTEGY).
- In Asia, Japan -0.1% to 10071. Hong Kong +0.1% to 22530. China -0.6% to 2794. India +1.9% to 19078.
- In Europe, at midday, London +0.4%. Paris +0.4%. Frankfurt +0.4%.
- Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude +0.7% to $97.35. Gold -0.2% to $1526.70.
Thursday's Economic Calendar
- Chain Store Sales
7:00 BoE Announcement
7:45 ECB Announcement
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
11:00 White House Budget Talks
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
The Market Currents team contributed to this post.
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